Cost Analysis for Decision Making Assignment

Razr-Tech Manufacturing Ltd produces specialized computer parts for computer manufacturers around the world. Apart from the central processing unit (CPU), graphics processing unit (GPU), motherboard, and Random Access Memory (RAM), Razr also produces small microprocessors. Two of its microprocessors are the Snapdragon and Exynos.

The Snapdragon is sold at $300 per unit while the Exynos is sold at $440 per unit. In 2023, demand for the Snapdragon is expected to be 24,000 units while demand for Exynos is expected to be 6,000 units. Estimated beginning inventory in 2023 for Snapdragon and Exynos are expected to be 600 and 300 units respectively, while the company desires to have an ending inventory of 500 and 200 units respectively for Snapdragon and Exynos. Additional information for the production of Snapdragon and Exynos follows:


Razr-Tech expects the average wage rate to be $36 per hour in 2023. Razr-Tech uses direct labor hours to apply overhead. Each year the company determines the overhead application rate for the year based on the budgeted output for the year. The company maintains negligible work-in-progress inventory and expects the cost per unit for both the beginning and ending inventory of finished goods to be identical.